Markets Might Be Misreading the Fed’s Messages

6/21/2013 4:29PM

Since Fed Chairman Ben Bernanke said the central bank expects to curb its big bond-buying program later this year, markets tumbled. But, a close look at his comments and Fed official’s interest-rate projections show the Fed took several steps aimed at sending the opposite signal. Jon Hilsenrath reports.

This transcript has been automatically generated and may not be 100% accurate.

... the ... world's eyes glued on the markets just about to close in the Dow up about forty points ... as ANP's slightly AG down and the city of Sarian Nasdaq to just a little bit of is that some of the state yesterday ... Eni's remains a said of the markets around the world and Dennis Berman Wall Street Journal ... Welcome to the pm is how we are joined by our ... renowned Fed watcher Jon Hilsenrath in Washington DC ... John Abby's book yesterday lots to talk about today you wrote a story that is very well read online this afternoon ... that argues that Mr. beneath his comments which seemed to suggest that the Fed was ... was tightening its view on interest rates ... and a ... of liquidity in the system ... perhaps the market that is is buying this a little too hard tell us a high-tech ID view things ... well it that that that is sending a very complicated message in the market has had a hard time reading it that one of its China made ... in today's pieces that ... frankincense and very dovish things that interest rates to it in his testimony on Wednesday ... with Caden got overlooked ... he said the Fed doesn't think it ever seen it sell mortgage backed securities ... I've that have the potential to be a big D on another day ... I he said the Fed might lower its commercial for what it raises interest rates ... that it's it's a nap percent threshold he said it might lower that ... not which would suggest keeping rates lower for longer ... the market seems to look past that and he also said that the Fed ... but it does start raising interest rates again to do it in a very gradual pace ... this is all new information it's all done this and ... that instead the markets tell ... them the hawkers things that the Fed was saying which was ... laying out a framework for pulling back its bond buying ... and the market sold off on a sellout ... it's complicated times I was trying to explain some things people and the baton ... of you know how markets work markets where different perhaps than the information is given to them ... and if you're in the market and one again ahead of any significant change from a magistrate perspective the beast of for the surly long funds is only one way for the sole interest rates to move so ... if you think there's any sign ... any sign that the heading that way gotta get out of it which means move now well that's about it but it didn't this is the really important distinction yet existing research and long-term rates in sch and expected short-term rates of that ... you should expect long-term rates to go up ... in this environment if you believe that that the Fed is saying that the economy's getting stronger ... I think things next year is indeed better than this year ... the Fed is saying it's gonna pull back on its bond on its bond buying program ... launch a race to go up ... but if it is also trying to endure short-term rates that ... are trying to send a message the market that are not given the raising short-term rates ... until twenty fifteen AM ET when they do it's can be very gradual ... but we're seeing movements in short-term money markets in Eurodollar futures in Fed funds futures ... which suggests that investors are saying ... that that might raise short-term rates sooner than expected ... and that the part of a new life that I think is getting lost in this that the part that burn Anqi was pushing hard against yesterday or Wednesday and people walk right past ... okay now one other significant change that today is James Bullard ... use of long been a hawk seem to have a more dollars dovish view ... on down rates tells about that ... well you know the essence of Gore's message is ... no paraphrasing and we should just kept on mass job right so if he's saying it was premature ... for the Fed to articulate this plan when they're in a pullback of bond buying program ... this is a way station waiting to see more information before they have enough confidence to say this ... so no one has been gripes is that these but they blab too soon ... for I he was trying to clarify things for people and steady same-store freak them out of of such a complicated and so many actors so much at stake ... be sure to read John's the column on the law Street Journal dot com in tomorrow's ... Wall Street Journal The John McKinnon from the editors over coming out of the time the RNA has not